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Rise in Insolvency Cases

12/02/2010

Personal and Corporate insolvency cases continue to rise.

Figures released this month by the Insolvency Service show that during 2009 there were 134,142 personal insolvencies in England and Wales which, the Insolvency Service say, equated to approximately 1 insolvency in every 320 adults. Alarmingly, these statistics show an increase of over 25% as compared with the 2008 levels.

Bankruptcies and individual voluntary arrangements (IVAs), as expected, accounted for the vast majority of personal insolvencies. The remaining cases related to the newly conceived Debt Relief Orders (DROs) which came into force on the 6 April 2009. DROs last for one year and can provide relief to insolvent individuals who have less than £15,000 of debt subject to certain restrictions.

The numbers of personal insolvencies in the present recession dramatically exceed those seen on the last recession in the early 1990s which saw by comparison less than 40,000 people a year becoming insolvent.

For 2009, the Insolvency Service reports a similar picture for corporate insolvencies. During 2009, there were a total of 19,077 compulsory liquidations and creditors’ voluntary liquidations. This represents nearly a 23% increase on 2008 figures.

Litigation solicitor Stephen McArdle comments “the continued rise in both personal and corporate insolvency rate in the present economic downturn means that businesses and creditors should pay ever increasing attention to their own credit control and debt recovery procedures to avoid being caught out by an insolvent debtor”

“Businesses who take quick and effective debt recovery action against debtors can maximise chances of a recovery and potentially avoid bad debts being written off”.

KBL have set up a free debt recovery costs calculator to enable clients to easily determine the cost of the debt recovery process. For further information please contact Paul Hatton head of debt recovery.

Source: the Insolvency Service - http://www.insolvency.gov.uk/otherinformation/statistics/201002/index.htm